Feasibility Report

on
E-COMMERCE PLATFORM

Prepared by:

Zohaib Siddiqi
Feasibility Report E-Commerce Platform

Table of Contents

1 EXECUTIVE SUMMARY ................................................................................. 3

2 PURPOSE OF THE DOCUMENT .................................................................... 5
3 BRIEF DESCRIPTION OF PROJECT & PRODUCT ....................................... 5
3.1. Business Process Flow ................................................................................. 7
3.2. Installed and Operational Capacities ........................................................... 11
4 CRITICAL FACTORS .....................................................................................12
5 GEOGRAPHICAL POTENTIAL FOR INVESTMENT .....................................13
6 POTENTIAL TARGET CUSTOMERS / MARKETS ........................................13
7 PROJECT COST SUMMARY.........................................................................16
7.1. Project Economics ....................................................................................... 16
7.2. Financial Feasibility Analysis ....................................................................... 16
7.3. Financial Feasibility Analysis with 50% Debt ............................................... 17
7.4. Project Cost ................................................................................................. 17
7.4.1. Land .................................................................................................... 18
7.4.2. Building ............................................................................................... 18
7.4.3. Office Equipment Requirement ......................................................... 19
7.4.4. Furniture and Fixture Requirement................................................... 20
7.4.5. Vehicle Requirement .......................................................................... 20
7.4.6. Pre-Operating Cost Requirement ...................................................... 20
7.4.7. Advance against Building ................................................................. 21
7.5. Breakeven Analysis ..................................................................................... 21
7.6. Revenue Generation ................................................................................... 22
7.7. Variable Cost Estimate ................................................................................ 26
7.8. Fixed Cost Estimate .................................................................................... 28
7.9. Human Resource Requirement ................................................................... 29
8 USEFUL WEB LINKS ....................................................................................32
9 ANNEXURES .................................................................................................32
9.1. Income Statement ....................................................................................... 32
9.2. Balance Sheet ............................................................................................. 33
9.3. Cash Flow Statement .................................................................................. 34
10 KEY ASSUMPTIONS .....................................................................................35
10.1. Operating Cost Assumptions ....................................................................... 35
10.2. Revenue Assumptions................................................................................. 35

1
Feasibility Report E-Commerce Platform
10.3. Financial Assumptions................................................................................. 35
10.4. Debt Related Assumptions .......................................................................... 36
13.1. Cash Flow Assumptions .............................................................................. 36

2
Feasibility Report E-Commerce Platform

1 EXECUTIVE SUMMARY
E-commerce is also known as electronic commerce or internet commerce. It refers to
the buying and selling of goods or services using the internet. E-commerce is often
used to refer to the sale of physical products online, but it can also describe any kind
of commercial transaction that is facilitated through the internet.
This “Pre-feasibility Document” provides details for setting up “E-Commerce Platform”,
which has a capacity of serving 25,920 orders in a year at a maximum capacity of
100%. The starting capacity in “Year One” has been assumed to be 60%, which is
equal to processing 15,552 orders. The maximum annual capacity of customer orders
that can be served has been calculated on the basis of persons employed in sales
department, stores department and packing/dispatching departments. This is because
these persons are directly involved in processing of customer orders. As the
operational capacity reaches to 25,000 customer orders in 6th year of operations, more
persons in sales, stores and packing/dispatching departments are needed to handle
the workload. This need is met by hiring more employees in these departments. Hiring
of new staff increases the capacity of proposed E-commerce project from 25,920
orders to 43,200 orders from year 6 onwards. The proposed project is expected to
serve 36,671 orders in year 10 of operations. This is maximum number of orders to be
served in any year during the projected period of 10 years. At 36,671 orders in a year,
the capacity utilization is around 85%.
The unit is proposed to be ideally located in metropolitan cities like Lahore, Karachi,
Islamabad, Faisalabad, Quetta, Peshawar, Hyderabad, Rawalpindi, etc. These cities
are preferred for the proposed business due to easy availability of products at
wholesale prices, availability of the required technical staff and high-speed internet.
Another reason to establish the proposed project in one of these cities is that proposed
project can offer same day delivery within the city by contracting with local courier
companies. Major cities of Pakistan collectively account for 51% of the e-commerce
buying.
The business of “E-Commerce Platform” will be set up in a rented building with an area
of 2,254 sq. ft. (approximately 10 Marlas). The project requires a total investment of
PKR 7.16 million. This includes capital investment of PKR 5.03 million and working
capital of PKR 2.12 million. The project is financed through 100% equity. The Net
Present Value (NPV) of project is PKR. 70.21 million with an Internal Rate of Return
(IRR) of 91% and a Payback period of 1.65 years. Further, this project is expected to
generate Gross Annual Revenue of PKR 62.14 million during 1st year, with Gross Profit
(GP) ratio ranging from 24% to 30% and Net Profit (NP) ratio ranging from 6% to 13%
during the projection period of ten years. The proposed project will achieve its
estimated breakeven point at capacity of 42% at breakeven revenue of PKR 43.39
million during first year.
The proposed project may also be established using leveraged financing. At 50% debt
at a cost of KIBOR+3%, the proposed E-commerce platform business provides Net
Present Value (NPV) of PKR 79.13 million, Internal Rate of Return (IRR) of 92% and

3
Feasibility Report E-Commerce Platform

Payback period of 1.63 years. Further, this project is expected to generate Net Profit
(NP) ratio ranging from 6% to 13% during the projection period of ten years. The
proposed project will achieve its estimated breakeven point at capacity of 43% with
annual revenue of PKR 45.01 million.
The proposed project will provide employment opportunities to 15 to 17 people having
some prior experience or education in the related field of business.
As evident from the above financial figures the proposed project for E-Commerce
Platform shows reasonable profitability and is economically and financially viable. The
legal form of this project is proposed as “Sole Proprietorship”. However, the proposed
project may also be established as a “Partnership Concern” or a “Private Limited
Company”.

4
Feasibility Report E-Commerce Platform

2 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate Client “Hawkins International
Pvt. Ltd.” in project identification for investment. The project pre-feasibility may form the
basis of an important investment decision and in order to serve this objective, the
document/ study covers various aspects of project concept development, start-up, and
production, marketing, finance and business management.
The purpose of this document is to provide information to the potential investors about
establishing a business of “E-Commerce Platform”. The document provides a general
understanding of the business to facilitate potential investors in crucial and effective
investment decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes such
reports reveal certain thumb rules; best practices developed by existing enterprises by
trial and error, and certain industrial norms that become a guiding source regarding
various aspects of business setup and its successful management.
Apart from carefully studying the whole document one must consider critical aspects
provided later on, which form the basis of any investment decision.

3 BRIEF DESCRIPTION OF PROJECT & PRODUCT

Electronic commerce, commonly written as E-commerce, is the buying and selling of
goods over the internet. These business transactions occur either as business-to-
business (B2B), business-to-consumer (B2C), consumer-to-consumer or consumer-
to-business. The proposed project is based on Business-to-consumer (B2C) model
using online Point of Sale (online store) that is being operated through the business’
website. B2C is the retail part of E-commerce on the internet in which the businesses
sell products, services or information directly to consumers. The proposed project
assumes to get supplies of products through a webstore. The E-commerce business
will offer products relating to cosmetics and artificial jewelry, apparel for men, women
and children, electronics and electrical gadgets, gifts and decorative items, and
footwear.
E-commerce is growing steadily in Pakistan. As per federal Ministry of Commerce, E-
commerce market size posted a growth of over 35 percent in the first quarter of the
fiscal year 2022; when it increased to PKR 96 billion compared to PKR 71 billion over
the same period during last year. As of January 2022, there were over 61 million
Internet users in Pakistan. The number of Internet users increased by 11 million within
one year between 2020 and 2021. These statistics make Pakistan an attractive place
for growth and development of E-commerce.

5
Feasibility Report E-Commerce Platform

Fashion goods constitute the largest segment in E-commerce and forms 70% of E-
commerce market in Pakistan.1 Major products included in the fashion segment are
apparel, cosmetics, jewelry, footwear, gifts and decors. Electronics products segment
stands next to fashion goods with 12% of the E-commerce market in Pakistan.
This document provides details for setting up an E-commerce Platform on B2C
concept. Establishment of a medium sized online store involves purchase of finished
products from the wholesale market as well as through B2B online platforms. The
proposed project will deal in online selling of following products:
 Apparel for men, women and children
 Cosmetics and artificial jewelry for women
 Electronic and trendy gadgets like smart watches, car chargers, car mounts, ring
lights, wireless portable speakers, room humidifiers, etc.
 Footwear for men and women
 Gifts and decorative items
E-commerce platform requires a web store with reliable hosting services and social
media accounts on Facebook, Instagram, Twitter, LinkedIn, Snapchat, etc.
E-commerce platform also requires services of shipping carriers for delivery of online
orders. Some of reputable courier service providers in Pakistan are TCS, Leopards,
M&P, Blue Ex, Call Courier, Daewoo Fastex and OCS. The courier service providers
deliver the products ordered by client. They also collect cash from customers against
the delivery of products. This cash is then transferred to the online seller.
The unit is proposed to be set up in a rented building having covered area of 2,254 sq.
ft. (approximately 10 Marla). The proposed project will process 15,552 orders in first
year of operation. The business will operate 270 days in a year. However, the website
will remain operational for the whole year for customers to place their orders. The
proposed business will create employment opportunities for 17 persons.

1 Source: https://www.statista.com/outlook/dmo/ecommerce/pakistan

6
 Feasibility Report E-Commerce Platform

4.1 Business Process Flow

E-Commerce Platform process flow is shown in Figure 1.

Figure 1: Service Process Flow

Barcoding and
Updation of Product
Online Store Shipment
• From Wholesale • Selection of Product • Receiving of
Suppliers • Adding of shipment Return Package
• From B2B E- address • Pricokdiuncgt and Packing of • Shiping

commerce Platforms • Barcoding • Slection of Payment Exchange

Procurment Method • Delivery / Collection by Products
• Updation of Onlone Shipping Carriers
Store Order Place by Return /

7
Feasibility Report
E-Commerce Platform

Brief description of process flow is as follows:

Procurement
First step in the process is to purchase the products. The proposed project will procure
the products from multiple sources including wholesale markets and online B2B E-
commerce platforms. Pakistan’s metropolitan cities have multiple wholesale markets,
some of which are listed below:
 Lahore: Shah Alam Market, Anarkali Bazar, Azam Market and Hall Road
 Karachi: Boulton Market
 Rawalpindi: Raja Bazar
 Faisalabad: Quaid-e-Azam Market, Tata market and Jinnah Market
B2B E-commerce markets include AliExpress, Alibaba, DHGate, etc.
The proposed project will maintain the stock of goods for one week approximately for
all the product lines. Figure 2 shows a wholesale market in Lahore.
Figure 2: Wholesale Market

Updation of Online Store

After procurement of goods, the next process is to affix Barcodes on the products. A
Barcode, consisting of bars and spaces, is a machine-readable representation of
numerals and characters. These Barcodes are used to manage the inventory items.
Every inventory item has to receive its unique barcode. The store staff prints the
barcode and affixes it on a product item. These inventory items are then updated on
online store by Sales department through integrated inventory management tools in
webstore. Figure 3 shows artificial Jewelry product with a barcode on it.

8
Feasibility Report
E-Commerce Platform

Figure 3: Barcode on Product

Placement of Order by Customers

Customers can place the order online on web store. Once the customer selects a
product, it will be added to his web cart. After selecting the desired products, customer
will add delivery address, contact details and payment method. Both online and cash-
on-delivery options will be available. Figure 4 shows payment options for online
shopping.
Figure 4: Payment Options

Product Shipment
Information regarding sales orders is extracted from E-commerce system on daily
basis. This extracted Information includes contact details of customers, product IDs,
payment details and transaction IDs. Sales staff manually checks sales order data for
correlation with business rules e.g., full address, contact details, products ordered.

9
Feasibility Report
E-Commerce Platform

If an anomaly is identified, sales staff will contact with customer to resolve the issue. If
the issue remains unresolved after calling the customer, then employee order mightbe
cancelled.
Order is passed to the store department for further processing and shipment to
customer. The stores department arranges the goods to be delivered. These goods
are then packed. Stores department then prints shipping details such as weight, size,
destination, product barcode and customer contact. These details are printed on a
form that is designed to include shipping details. This printed form is then pasted on
packed goods. Stores department then scans the product barcode using barcode
scanner that updates the online store. The package containing products to be
delivered are then handed over to courier, the service provider for product delivery.
The courier service provider delivers the products to customer and collects the cash
on behalf of E-commerce platform, if payment method chosen by customer is cash-
on-delivery. The collected amount is normally transferred to E-commerce platform
through banking channels. However, where customer chooses the option to pay
through other channels, such as Debit/Credit cards, Easypaisa /Jazz Cash, etc., the
payment gets directly transferred to E-commerce platform. Figure 5 shows a ready-to-
deliver shipment.
Figure 5: Ready-to-Deliver Shipment

Return and Exchange

To meet customer expectations, the proposed project will offer free return and
exchange option to customers if the goods are not delivered as per the order. Return
and exchange policy is an important factor in success of E-commerce business and
the core element for retention of the customers. Figure 6 shows animated picture of
return and exchange.

10
Feasibility Report
E-Commerce Platform

Figure 6: Return and Exchange

5.1. Installed and Operational Capacities

The total service capacity is based on the order processing capacity of the setup. The
unit would operate in a single shift of 8 hours per day for 270 days in a year. In the
beginning, the proposed E-commerce Platform, at maximum capacity of 100%, can
process 25,920 orders annually. However, during the first year of operations, the
proposed project is expected to attain 60% of its total orders processing capacity to
process 15,552 orders. The operational capacity increases by 10% per annum.
Maximum annual capacity of customer orders that can be served has been calculated
on the basis of persons employed in sales, stores and packing/dispatching
departments. This is because these persons are directly involved in processing of
customer orders. As the operational capacity reaches to 25,000 customer orders in
the 6th year, more persons in sales, stores and packing/dispatching departments are
needed to handle the workload. This need is fulfilled by hiring more employees in these
departments. Hiring of new staff increases the capacity of proposed E-commerce
project to 43,200 orders inform year 6 onwards. The proposed project is expected to
achieve a maximum capacity utilization of 84.9% (approximately 85%) in the projected
10 years period. At this operational capacity, the proposed project will be serving
36,671 orders in year 10 of operations. The customers will have the option to place
orders thorough out the year. The orders placed during public holidays will be
processed during the following working days. Table 1 shows the installed and
operational capacities of the proposed unit.

11
Feasibility Report
E-Commerce Platform

Table 1: Installed and Operational Capacity

Items Category Proportion of Maximum Initial Capacity
Orders Capacity Utilization 60%

Cosmetics and Artificial 20% 5,184 3,110

Jewelry
Apparel for men, women 25% 6,480 3,888
and Children
Electronics and 15% 3,888 2,333
electrical Gadgets
Gifts and Decors 15% 3,888 2,333
Footwears 25% 6,480 3,888
Total 100% 25,920 15,552

4 CRITICAL FACTORS
The following factors are crucial in the success of E-commerce business:
 Arrangement of reliable web host
 Arrangement of trusted suppliers
 Easy accessibility to the web stores
 Quick load time of the website
 Compatibility of the website on mobile
 Management of the web traffic
 Real-time backup of the website (known as Continuous Data Protection)
 Easy navigations and checkouts on the website
 Availability of social sharing buttons on website
 Clear call to action on every page
 Prominent contact information on the website
 Accurate product reviews on the website
 Security of the confidential information and privacy of the customer
 Accuracy of the delivery as per the order
 Maintenance of quality products
 Exchange and return policy for the customer
 Building of the customer trust

12
Feasibility Report
E-Commerce Platform

5 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Since the E-commerce business is based on internet, it can be established anywhere
where internet service is available. The metropolitan cities of Karachi, Lahore, Quetta,
Islamabad, Peshawar, Rawalpindi, Hyderabad, Faisalabad, etc. are suitable cities for
establishment of the proposed project as required technical staff is easily available in
these cities. Moreover, wholesale markets and highspeed internet is also available in
these cities.

6 POTENTIAL TARGET CUSTOMERS / MARKETS2

There are 173.2 million mobile connections in Pakistan with 61.34 million internet
users. The number of Mobile connections in Pakistan are increased by 6.9 million
between January 2021 and January 2022. The growth rate of mobile phone
connections has been 4.2% annually. The number of internet users in Pakistan
increased by 11 million, being 21%, between 2021 and 2022.
The 'dot com' culture is exploding in Pakistan. It has increased the numbers of
commercial websites and information portals. These indications are optimistic and
promising for the E-commerce sector. Electronic commerce is rapidly expanding in
Pakistan, creating the opportunity for entrepreneurs to invest in variety of e-commerce
projects.
The total value of B2C consumer goods in E-commerce market of Pakistani is
accounted for US$ 3.9 billion in 2021 as compared to US$ 2 billion in 2020. 3 Most
stores gain sales from their web store/E-commerce platforms.
Figure 7 shows the total amount spent in consumer E-commerce categories in 2021
in US$. The E-commerce categories being presented in Figure 7 and Figure 8 are
Fashion and Beauty Products, Electronics, Food and Personal Care, Furniture, Toys,
DIY (Do-It-Yourself) and Hobbies, Digital Music and Video games. The DIY products
include puzzles, blocks, etc. that the children use for playing.

2 Source: Most of the data in this section has been obtained from “datareportal.com”, unless any other source
is specifically mentioned for any information contained in the section. The link of “datareportal.com” is as
follows:
https://datareportal.com/reports/digital-2021-pakistan
3 https://www.statista.com/study/85345/ecommerce-in-pakistan/

13
Feasibility Report
E-Commerce Platform

Figure 7: E-commerce Spent by Category

3,000.0 2,750.0

2,500.0
Numbers in US$ Millions

2,000.0

1,500.0

1,000.0
455.9
370.9
500.0 266.7
164.5 164.7
42.6
-
Fashion and Electronics Food and Furniture Toys, DIY Digital Video
Beauty Personal and Music Games
Care Hobbies

Figure 8 shows change in the percentage of total amount spent by consumer in E-

commerce categories in 2021 as compared to 2020.
Figure 8: Growth in Amount Spent on E-commerce Categories
98.1
100.0
87.5
90.0
80.0
67.7
70.0 63.0 61.5 58.6
53.3
Percantage

60.0
50.0
40.0
30.0
20.0
10.0
-
Fashion Electronics Food and Furniture Toys, DIY Digital Video
and Beauty Personal and Music Games
Care Hobbies

In 2021, 47.6 million Number of people purchased consumer goods via internet with
the total value of the goods US$3.9 billion. Annual growth in the total value of the
consumer goods Ecommerce B2C market was 83.5% in year 2021 as compared to
year 2020. Consumer average annual spending was $82 per user.

14
Feasibility Report
E-Commerce Platform

Around 64% of Pakistan’s population is under the age of 29 and the country will
continue to enjoy the youth bulge for another 30 years or so, according to United
Nations Human Development Report, 2017.4
The proposed project assumes that potential target customers will be the people
mostly in the age group of 12-40 years, residing in urban cities. People of this age
group have better internet knowledge and they are fond of buying online as compared
to people in older age brackets or the ones residing in smaller cities. This trend is also
changing due to increased accessibility of internet and smartphones, increasing
literacy rate and growing awareness all over Pakistan. Rural population is also quickly
adopting new technology. Ecommerce will gain ground in rural areas also as internet
availability is improving in these areas.
COVID-19 proved to be a blessing in disguise for e-commerce industry as it changed
the buying habits of people. The global pandemic played a significant role in increase
of the e-commerce business as the lockdown compelled people to buy online.

7 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of
E-Commerce business. Various costs and revenue related assumptions along with
results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexures.
The project is proposed to be financed through 100% equity. Total project cost is
estimated to be PKR 7,165,501, which comprises of capital investment of PKR
5,037,857 and working capital of PKR 2,127,643.

9.1. Project Economics

All the figures in this financial model have been calculated after carefully considering
the relevant assumptions and the target market.

9.2. Financial Feasibility Analysis

The financial feasibility analysis provides the information regarding projected IRR,
NPV and payback period of the study, which is shown in Table 2.

4 http://hdr.undp.org/en/content/unleashing-potential-young-pakistan

15
Feasibility Report
E-Commerce Platform

Table 2: Financial Feasibility Analysis

Description Project

IRR 91%

NPV (PKR) 70,214,767

Payback Period (years) 1.65

Projection Years 10

Discount rate used for NPV 15%

9.3. Financial Feasibility Analysis with 50% Debt

The financial feasibility analysis provides the information regarding projected IRR,
NPV and payback period of the study on the basis of Debt: Equity Model (50:50), which
is shown in Table 3.
Table 3: Financial Feasibility Analysis with 50% Debt
Description Project
IRR 92%

NPV (PKR) 79,132,387

Payback Period (years) 1.63

Projection Years 10
Discount rate used for NPV 13%

9.4. Project Cost

The details of project cost calculated for the proposed E-Commerce business are
shown in Table 4.
Table 4: Initial Project Cost
Cost Item Cost (PKR)
Land -
Building / Infrastructure 308,215
Furniture & Fixtures 915,000
Office vehicles 1,161,500
Office equipment 1,340,500
Security against building 283,500
Pre-operating costs 1,029,143
Total Capital Costs 5,037,857
Working Capital

16
Feasibility Report
E-Commerce Platform

Computer Accessories 7,333

Inventory 1,508,387
Upfront building rent 94,500
Upfront insurance payment 17,423
Cash 500,000
Total Working Capital 2,127,643
Total Project Cost 7,165,501

9.4.1. Land
The E-Commerce Platform will be established in a rented building with an area of 2,254
sq. ft. This has been proposed to avoid the high land cost in a metropolitan city.Office
buildings with the required area for the proposed project are easily available inthe
market. Therefore, no land cost has been added to the project cost. Breakup of the
space requirement is provided in Table 5.
Table 5: Land Area Breakup
Description % Break-Up Numbers Area Sq. Ft.
Executive Office 6% 1 144
Staff Work Stations 26% 1 576
Conference Room 8% 1 182
Reception Area 5% 1 120
Kitchen 6% 1 144
Washrooms 10% 4 224
Store Room 26% 1 576
Procurement Department 6% 1 144
Pavement/Driweway 6% 1 144
Total 100% 2,254

9.4.2. Building
There will be no cost of building construction as the proposed business will be started
in a rented facility. However, there will be a renovation cost; required to make the
building usable for the business. The proposed project requires electricity load of 2.03
KW for which an electricity connection under the general supply tariff – Commercial
will be required. Building rent of PKR 94,500 per month has been included in the
operating cost. Building renovation cost is shown in Table 6.

17
Feasibility Report
E-Commerce Platform

Table 6: Renovation Cost Details

Cost Item Units of Total Liter / Cost/Unit/ Total
Mmeasurement Area / Number5 Sq.feet6 Cost
Paint Cost Liters 1947 500 96,767

Labour Cost Feet 5,8068 8 46,448

Curtains Numbers 6 5,000 30,000

Blinds Numbers 10 2,000 20,000

Wall Clocks Numbers 6 2,500 15,000

Paintings Numbers 10 10,000 100,000

TOTAL 308,215
(PKR)
9.4.3. Office Equipment Requirement
Table 7 presents the office equipment requirement proposed for the unit.
Table 7: Office Equipment Requirement
Cost Item Units Unit Cost (PKR) Total Cost (PKR)
1.5 ton Inverter AC 4 90,000 360,000
Laptop 4 80,000 320,000
Desktop 4 30,000 120,000
Printer 2 40,000 80,000
LED 1 40,000 40,000
Water Dispenser 1 20,000 20,000
Ceiling Fan 7 4,500 31,500
Exhaust Fan 2 2,000 4,000
Wi-Fi Router and Connection 2 5,000 10,000
CC TV 4 2,000 8,000
DVR 1 12,000 12,000
Multimedia Projector 1 85,000 85,000
Server 1 250,000 250,000
Total 1,340,500

5 Numbers of curtains, blinds, and wall clocks assumed quantities keeping in view the rooms and area of business

premises.
6 Costs are based on primary research.
7 Quantity of paint has been calculated on the basis of area of walls and ceiling to paint.
8 This represents area of walls and ceiling.

18
Feasibility Report
E-Commerce Platform

9.4.4. Furniture and Fixture Requirement

Table 8 gives details of the furniture and fixture required for the project.
Table 8: Furniture and Fixtures Requirement
Cost Item Units Unit Cost Total Cost
(PKR) (PKR)
Office Tables 4 25,000 100,000
Workstations 5 40,000 200,000
Executive Tables 4 30,000 120,000
Executive Chairs 4 20,000 80,000
Office Chairs 5 10,000 50,000
Sofa Sets 3 35,000 105,000
Chairs for Conference Room 8 10,000 80,000
Racks for Store Room 6 30,000 180,000
Total 915,000

9.4.5. Vehicle Requirement

Details of vehicles required for the project is given in Table 9.
Table 9: Vehicle Requirement
Cost Item Unit(s) Unit Cost Registration fee Total Cost
(PKR) @ 1%9 (PKR)
Carry Van 1 1,150,000 11,500 1,161,500
Total Cost 1,161,500

9.4.6. Pre-Operating Cost Requirement

Details of pre-operating cost required for the project is given in Table 10.
Table 10: Pre - Operating Cost Requirement
Description Number Cost per Month Cost (PKR)
of
Months
Administration expense 1 160,00010 160,000

9 Registration
rate has been calculated on the basis of charges applicable by excise and taxation department.
10Includes cost salary for one month of IT staff PKR. 60,000, content writer PKR. 60,000 and office boy
PKR.20,000.

19
Feasibility Report
E-Commerce Platform

Utilities expense 1 19,14311 19,143

E Commerce Platform charges (For Details Refer to Table 11) 850,000

Total 1,029,143

9.4.6.1. E-commerce platform charges

Table 11 shows details of E-commerce platform charges to be included in pre-
operating charges.
Table 11: E-commerce Platform Charges
Cost Item Cost (PKR)
Domain Charges12 40,000
Webstore Development Charges 200,000
Content Writing Charges for Webstore 50,000
Webstore Plugins 50,000
Barcode Scanner and Printer13 50,000
Online App Store (IOS and Android 300,000
version)
Logo Designing Charges 10,000
Initial Product Shooting Charges 150,000
Total 850,000

9.4.7. Advance against Building

Details of advance security against rented building for the project is given in Table 12.

Table 12: Advance against Building

Cost Item Months Unit Cost (PKR) Total Cost (PKR)
Advance Security 3 94,500 283,500
Total Cost 283,500

9.5. Breakeven Analysis

Table 13 shows calculation of break-even analysis.

11 Calculated on the basis of per month utility cost keeping in view the electricity load of business.
12 While Purchasing Domain name, the investor should try to purchase multiple domain extensions i.e. .COM,
.COM.PK, .PK, .Co. etc. to protect brand name.
13 5 barcode scanners at the rate of PKR 4,000 each and one barcode printer of PKR 30,000.

20
Feasibility Report
E-Commerce Platform

Table 13: Break-Even Analysis

Description Amount First Year Ratios
(PKR)
Sales (PKR) – A 62,148,043 100%
Variable Cost (PKR) – B 46,561,571 75%
Contribution (PKR) (A-B) = C 15,586,472 25%
Fixed Cost (PKR) – D 10,883,853 18%
Contribution Margin 25%
Breakeven Revenue 43,397,260
Total no. of Orders Processed 15,552
Contribution Margin Per Order 1,002
Breakeven (No of orders) 10,860
Breakeven Capacity 42%

9.6. Revenue Generation

Based on 60% capacity utilization, sales revenue during the first year of operations is
shown in Table 14.
Table 14: Revenue Generation
Products Category Total Weighted average Sale Revenue Referenc14
Orders Price per Order (PKR) (PKR)

Cosmetics and 3,110 10,841,460 Table 15

3,486
Artificial Jewelry
Apparel for Men, 3,888 13,417,488 Table 16
3,451
Women and Children
Electronics and 2,333 12,481,550 Table 17
5,350
Electrical Gadgets
Gifts and Decorative Table 18
2,333 5,101 11,900,633
Items
Footwear 3,888 3,474 13,506,912 Table 19
Total Revenue 62,148,043

9.6.1. Weighted Average Sale Price per order of Cosmetics and Artificial
Jewelry

14 Difference
between the revenues mentioned in Table 14 and the Tables in reference is due to rounding off of
weighted average sale price per order.

21
Feasibility Report
E-Commerce Platform

Table 15 : Weighted Average Cost per Order of Cosmetics and Artificial

Jewelry
Cosmetics and Artificial Sales Number Average Price Total
Jewellery Ratio of per Unit at Year Revenue
Orders 1 (PKR)
Tools and Brushes 10% 311 4,000 1,244,000
Makeup Kit 10% 311 4,000 1,244,000
Lipstick and Allied items 10% 311 3,000 933,000
Nail Polish and Art Kits 5% 156 3,750 585,000
Foundation and Allied 5% 155 6,000 930,000
Eye Products 5% 155 1,750 271,250
Face Masks (Makeup 10% 311 1,250 388,750
Item)
Body Lotions and 5% 155 2,750 426,250
Creams
Earrings 10% 312 2,500 780,000
Bracelett 15% 466 4,000 1,864,000
Rings 10% 312 2,000 624,000
Jewellery Set 5% 155 10,000 1,550,000
Total 3,110 10,840,25015
A B
Average Revenue Per Order (PKR) (B/A)=C 3,486

9.6.2. Weighted Average Sale Price per Order of Apparel

Table 16: Weighted Average Cost per Order of Apparel
Apparels Sales Number of Average Total
Ratio Orders Price per Unit Revenue
at Year 1 (PKR)
Women Apparel
Unstitched 5% 195 4,500 877,500
Kurtas and 5% 195 5,250 1,023,750
Shalwar Qamez
Abbaya & Hijab 2% 78 6,250 487,500
Tops 5% 195 1,550 302,250

15 Difference with Table 14 is due to rounding off.

22
Feasibility Report
E-Commerce Platform

Bras, Panties and 3% 116 3,000 348,000

Lingerie
Sleepwear 2% 78 2,500 195,000
Winter Clothing 8% 312 5,000 1,560,000
Girls’ Clothing 15% 584 3,000 1,752,000
Pants, Jeans and 10% 388 2,500 970,000
Leggings
Men Apparel
T-shirts 8% 311 1,500 466,500
Shirts and Polo 5% 194 3,000 582,000
Pants and Jeans 8% 311 4,000 1,244,000
Shorts 5% 194 2,000 388,000
Kurtas and 9% 349 5,000 1,745,000
Shalwar Qameez
Winter Clothing 7% 272 5,000 1,360,000
Inner Wear 3% 116 1,000 116,000
Total 3,888 13,417,50016
A B
Average Revenue Per Order (PKR) (B/A)=C 3,451

9.6.3. Weighted average sale price per order of Electronic Gadgets

Table 17: Weighted Average Cost per Order of Electronic Gadgets
Electronic Sales Number Aaverage Price per Total
Gadgets Ratio of Orders Unit at Year 1 Revenue
(PKR)
Smart Watches 60% 1400 5,000 7,000,000
Ring Lights 20% 467 3,000 1,401,000
Wireless Portable 15% 350 10,000 3,500,000
Speaker
Room Humidifier 5% 116 5,000 580,000
Total 2,333 12,481,00017
Average Revenue Per Order (PKR) (B/A)=C 5,350

16 Difference with Table 14 is due to rounding off.

17 Difference with Table 14 is due to rounding off of Price per order.

23
Feasibility Report
E-Commerce Platform

9.6.4. Weighted average sale price per order of Gifts

Table 18 : Weighted Average Cost per Order of Gifts and Decors
Gifts and Decors Sales Number of Average Price per Total Revenue
Ratio Orders Unit at Year 1 (PKR)
Table Lamps 40% 934 3,500 7,000,000
Table Clocks 20% 466 1,500 1,401,000
Wall Clock 40% 933 3,500 3,500,000
Total 2,333 11,901,00018
A B
Average Revenue Per Order (PKR) (B/A) = C 5,101

9.6.5. Weighted Average Sale Price per Order of Gifts

Table 19: Weighted Average Cost per Order of Footwear
Footwear Sales Number of Average Price Total Revenue
Ratio Orders per Unit at (PKR)
Year 1
Women:
Heeled Sandles 15% 584 3,000 1,752,000
Flat Sandles 10% 389 1,500 583,500
House Slipers 5% 195 500 97,500
Khusa and 5% 195 3,000 585,000
Kohlapuri
Sneakers 10% 389 5,000 1,945,000
Flip Flops 5% 195 2,000 390,000
Men:
Flip Flops 10% 388 2,000 776,000
Sneakers 15% 583 5,000 2,915,000
Sandals 10% 388 3,000 1,164,000
Boots 10% 388 5,000 1,940,000
Formal Shoes 5% 194 7,000 1,358,000

18 Difference with Table 14 is due to rounding off of price per order.

24
Feasibility Report
E-Commerce Platform

Total 3,888 13,506,00019

A B
Average Revenue Per Order (PKR) (B/A) = C 3,474

9.7. Variable Cost Estimate

Variable costs of the project have been provided in Table 20.
Table 20: Variable Cost Estimate
Description of Costs Amount (PKR)
Purchase Cost goods 36,201,299
Delivery charges 3,888,000
Utilities 229,712
Direct Labor 2,580,000
Computer accessories 88,000
Packing Cost 1,242,961
Traveling and Communications expense 1,206,000
(phone, mail, internet, etc.)
Office Vehicles running expense 321,600
Office expenses (stationery, 804,000
entertainment, janitorial services, etc.)
Total 46,561,571

Table 21: Purchase Cost of Inventory

Products Revenue (PKR) Margin20 Inventory Cost
(PKR)
Cosmetics and 10,841,460 40% 6,504,876
Artificial Jewelry
Apparel for men, 13,417,488 40% 8,050,493
women and
Children
Electronics and 12,481,550 50% 6,240,775
electrical Gadgets
Gifts and 11,900,633 50% 5,950,317
Decorative Items

19 Difference with Table 14 is due to rounding off of price per order.

20 Margins have been considered on the basis of research respondents.

25
Feasibility Report
E-Commerce Platform

Footwear 13,506,912 30% 9,454,838

Total Inventory 36,201,299
Cost (PKR)

Table 22: Delivery Charges

Particulars Cost per Customer No of Customers Total Charges
Order (PKR)
Delivery 250 15,552 3,888,000
Charges
Total 3,888,000

Table 23: Direct Labor

Post Number Salary per Total Number of Total
of Labor Month Direct Labor – Direct
– Year 1 (PKR) Labor Cost Year 6 Labor Cost
- Year 1 (PKR) –
(PKR)
Year 6
Store In- 1 45,000 540,000 1 769,249
charge
Listing/Sales 2 25,000 600,000 4 1,709,442
Staff
Packing/ 2 25,000 600,000 4 1,709,442
Dispatch Staff
Store 2 35,000 840,000 4 2,393,219
Assistants
Total Direct 2,580,000 6,581,351
Labor Cost

Table 24: Computer Accessories

Particulars Sum of Laptop and Rate Total Cost

Desktop Cost (PKR) (PKR)
Accessories 440,000 20% 88,000
(320,000+120,000)
Total Cost (PKR) 88,000

26
Feasibility Report
E-Commerce Platform

Table 25: Web Hosting Charges

Particulars Charges per Months Total Charges
month (PKR) (PKR)
Webhosting Charges 5,000 12 60,000
Total (PKR) 60,000

Table 26: Variable Cost Assumptions

Description Details

Travelling and Communication expense 30% of administration expense

(phone, mail, internet, etc.)
Office vehicles running expense 8% of management staff expense
Office expenses (stationery, 20% of administration expense
entertainment, janitorial services, etc.)

9.8. Fixed Cost Estimate

Table 27 shows the estimated fixed cost of the project.
Table 27: Fixed Cost Estimate
Description of Costs Amount (PKR)
Management Staff 4,020,000
Administration Benefits expense 990,000
Web maintenance and SEO Consulatncy Charges 600,000
Building rental expense 1,134,000
Promotional expense21 3,107,402
Insurance expense 17,423
Depreciation expense 543,371
Amortization of pre-operating costs 205,829
Amortization of Legal, Licensing, and Training costs 205,829
Webhosting charges 60,000
Total 10,883,853

21 Social Mediamarketing expense have been calculated at the rate of 5% of revenue, since E-commerce business
requires high promotional expenses. These expenses are incurred for “Social Media Marketing ads”, “PPC-Pay
Per Click” and payments to “Social Media Influencers”.

27
Feasibility Report
E-Commerce Platform

Table 28: Fixed Cost Assumption-Management Staff Salary

Description of Costs Number of Salary per Amount (PKR)
Labor Month (PKR)
IT Staff 1 60,000 720,000
Content Writer 1 60,000 720,000
Procurement Manager 1 60,000 720,000
Procurement Officers 1 35,000 420,000
Admin & Finance Officer 1 40,000 480,000
Office Boy 2 20,000 480,000
Security Guard 2 20,000 480,000
Total 4,020,000

Table 29: Fixed Cost Assumption-Other

Description Details
Admin. Benefits Expenses 15% of administration expense
Promotional expense 5% of Revenue
Insurance expense 1.5% of Cost / WDV of Office
Vehicle
Depreciation Rates:

Building & infrastructure 10% of Cost

Office equipment 15% of Cost
Furniture & fixtures 15% of Cost
Office vehicles 15% of Cost

9.9. Human Resource Requirement

For the 1st year of operations, the E-Commerce Platform shall require the workforce at
a salary cost shown in Table 30.
Table 30: Human Resource Requirement
Post No. of Monthly Annual Number of Annual
Employee Salary Year Salary Employee Salary
s in Year 1 1 (PKR) Year 1 s in Year 6 (PKR) –
(PKR) Year 622
IT Staff 1
1 60,000 720,000 1,025,665

22 Costs of year 6 include effect of inflation rate @ 7.3% per annum.

28
Feasibility Report
E-Commerce Platform

Content 1 60,000 720,000 1,025,665

1
Creator
Procurement 1 60,000 720,000 1,025,665
1
Manager
Procurement 1 35,000 420,000 2 1,196,609
Officers
Store In- 1 45,000 540,000 769,249
1
charge
Sales Staff 2 25,000 600,000 4 1,709,442

Packing/ 2 25,000 600,000 4 1,709,442

Dispatch Staff
Admin & 1 40,000 480,000 683,777
Finance 1
Officer
Stores 2 35,000 840,000 4 2,393,219
Assistant
Office Boy 2 20,000 480,000 2 683,777
Security 2 20,000 480,000 2 683,777
Guards
Total 16 6,600,000 23 12,906,286

29
Feasibility Report
E-Commerce Platform

8 USEFUL WEB LINKS

Table 32: Useful Web Links
Organization Website

www.smeda.org.pk
Small and Medium Enterprises
Development Authority (SMEDA)
National Business Development www.nbdp.org.pk
Program
www.pakistan.gov.pk
Government of Pakistan
Ministry of Information Technology www.moitt.gov.pk
and Telecommunication
Pakistan Software Export Board https://www.pseb.org.pk
(PSEB)
Directorate of Information Technology http://doit.kp.gov.pk
(KPK)
Punjab Information Technology Board https://pitb.gov.pk
https://istd.sindh.gov.pk
Information, Science & Technology
Department, Govt. of Sindh
https://balochistan.gov.pk/departments/sc
Science and Information Technology
ience-and-information-technology
Department, Balochistan
https://itb.ajk.gov.pk
Information Technology Board, AJ&K
https://itu.edu.pk
Information Technology University
www.punjab.gov.pk
Government of Punjab
Government of Sindh https://sindh.gov.pk
http://kp.gov.pk
Government of Khyber Pakhtunkhwa
Government of Balochistan https://balochistan.gov.pk
https://gilgitbaltistan.gov.pk
Government of Gilgit Baltistan
https://ajk.gov.pk
Government of Azad Jammu &
Kashmir
www.tdap.gov.pk
Trade Development Authority of
Pakistan
Security and Exchange Commission of www.secp.gov.pk
Pakistan
www.sbp.gov.pk
State Bank of Pakistan
Federation of Pakistan Chambers of www.fpcci.com.pk
Commerce and Industry (FPCCI)
Punjab Small Industries Corporation www.psic.gop.pk
(PSIC)

30
Feasibility Report
E-Commerce Platform

Daraz.pk
Daraz
olx.com.pk
OLX
amazon.com
Amazon
AliExpress aliexpress.com

31
Feasibility Report E-commerce Platform

9 ANNEXURES
12.1. Income Statement
Feasibility Report E-commerce Platform

12.2. Balance Sheet

Feasibility Report E-commerce Platform

12.3. Cash Flow Statement

Feasibility Report E-commerce Platform

10 KEY ASSUMPTIONS
13.1. Operating Cost Assumptions
Table 33: Operating Cost Assumptions
Description Details
Building rent growth rate 10%
Furniture and fixture depreciation 15%
Vehicle depreciation 15%
Office equipment depreciation 15%
Inflation growth rate 8.3%
Wage growth rate 7.3%
Electricity price growth rate 8.8%
Office equipment price growth rate 8.0%
Office vehicle price growth rate 10.7%

13.2. Revenue Assumptions

Table 34: Revenue Assumptions
Description Details
Price Growth Rate 11.2%
Initial Year Capacity Utilization 60%
No of Customers Growth Rate 10%

13.3. Financial Assumptions

Table 35: Financial Assumptions
Description Details
Project life (Years) 10
Debt: Equity 0:100
Discount Rate 15%

35
Feasibility Report E-commerce Platform

13.4. Debt Related Assumptions

Table 36: Debt Related Assumptions
Description of Cost Details

Project Life (Years) 10

Debt: Equity 50:50
Discount Rate 13%

Debt Tenure 5 years

Grace Period 1 Year

Interest Rate (KIBOR+3%) 11.3%

13.1. Cash Flow Assumptions

Table 37: Cash Flow Assumptions
Description Days
Receivable Days 7
Payable Days 15

36